WELLINGTON/SYDNEY: The Australian dollar hit a fresh record high against the struggling euro on Friday as markets bet Europe's debt woes would last for a long time yet.
The New Zealand dollar dipped briefly on news of another earthquake near Christchurch but soon steadied at $0.7743 , up from $0.7724 late in New York on Thursday.
Trade was very thin with Tokyo on holiday and dealing rooms winding down early for Christmas, though traders reported some last minute exporter bids for the Aussie.
That helped nudge the Australian currency up to $1.0167 , from $1.0137 in New York. The Aussie now has support at $1.0051 with resistance at the 100-day moving average of $1.0203.
The euro remained on the ropes at A$1.2838, the third straight session of all-time lows. The New Zealand dollar was firm at NZ$1.6860 per euro after touching a three-month peak of NZ$1.6810.
The single currency has been in a long downtrend against the Aussie reflecting both the debt crisis in the EU and the relative outperformance of the Australian economy.
A major support for the Aussie has been strong offshore demand for Australian government bonds, one of the dwindling band of truly safe triple-A debt.
Just this week, Moody's reaffirmed the country's top rating citing very high economic resiliency, very high government financial strength and very low susceptibility to event risk.
"Australia's now almost unique triple-A sovereign credit rating and relatively high interest rates are very attractive for foreign investors," said analysts at StGeorge Bank.
This demand, particularly from foreign central banks, helped drive 10-year bond yields to record lows around 3.73 percent for a drop of no less than 178 basis points this year.
Aussie debt futures were likewise not far from all-time highs with the 10-year contract 0.015 points firmer at 96.215. The three-year contract dipped 0.02 points to 96.920 on Friday, but that compares with 94.70 at the end of last year.
Even after a couple of rate cuts, cash rates are relatively high for a developed nation at 4.25 percent giving the Reserve Bank of Australia (RBA) scope to stimulate the economy if needed.
Interbank futures imply rates could be cut by a full percentage point by June next year, though most analysts think it would take a global recession to get the central bank to ease that much.
For New Zealand, markets are pricing a near one-in-four chance of a quarter point cut in rates in January, but only 6 basis points of easing over the next year.
NZ government bonds were mixed, with 10-year yields around 3.875 percent, compared to an all-time low of 3.76 pct struck last week.
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